HomeMy WebLinkAboutCC RES 06-031RESOLUTION NO. 06- 31
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT
APPROVING THE SALE BY THE PALM DESERT REDEVELOPMENT
AGENCY OF CERTAIN REAL PROPERTY CONSISTING OF
APPROXIMATELY 0.53 ACRES ON A PARCEL LOCATED BETWEEN
PAINTER'S PATH, HIGHWAY 111, THE PALM VALLEY STORM CHANNEL
AND WEST EL PASEO PURSUANT TO A DISPOSITION AND
DEVELOPMENT AGREEMENT BY AND BETWEEN THE PALM DESERT
REDEVELOPMENT AGENCY AND C V FOOD SERVICE, INC. (D.B.A. LA
SPIGA)
The City Council of the City of Palm Desert hereby finds, determines, resolves and
orders as follows:
Section 1. On March 9, 2006, the City Council of the City of Palm Desert (the "City") and
the Palm Desert Redevelopment Agency (the "Agency") held a duly noticed joint public hearing
on the approval of the Agency's proposed sale of certain real property consisting of
approximately 0.53 acres located in the Agency's Project Area No. 1 (the "Property"), as
described in that certain Disposition and Development Agreement (the "Agreement") by and
between C V Food Service, Inc., a California corporation, d.b.a. La Spiga (the "Developer") and
the Agency, at which time all persons desiring to comment on or ask questions concerning the
Agreement and the lease of the Property to the Developer were given the opportunity to do so.
On or before February 23, 2006, information concerning the Agency's proposed sale of the
Property to Developer, a copy of the Agreement, and the Summary Report prepared pursuant to
California Health and Safety Code Section 33433 were made available for public inspection and
copying in the offices of the Palm Desert Redevelopment Agency at 73-510 Fred Waring Drive,
Palm Desert, California 92260 between the hours of 8 a.m. and 5 p.m., Monday through Friday.
Notice of the public hearing was published in the Desert Sun on Thursday, February 23, 2006
and Thursday, March 2, 2006.
Section 2. Pursuant to the Agreement, the Developer covenants to construct certain
improvements on the property within a certain time period as therein described, including but
not limited to, an approximately 4,500 square foot restaurant facility plus an approximately 1,000
square foot exterior patio, walled gardens and certain public improvements.
Section 3. The City Council reviewed and considered all written and oral comments,
questions and concerns regarding the Agency's proposed sale of the Property to Developer
received prior to and at the public hearing on March 9, 2006.
Section 4. The Property contains approximately 0.53 acres, and pursuant to the
Agreement will be sold to the Developer for a purchase price of $750,000. Agency staff
obtained a report prepared by a real estate analysis services company, which evaluated the fair
market value of the Property at its highest and best use, and determined that the probable fair
market value of this property at its highest and best use is approximately $32.50 per square
foot. A Summary Report prepared pursuant to California Health and Safety Code Section
33433 is attached hereto as Exhibit A.
RESOLUTION NO. 06- 31
Section 5. Project Area No. 1 is an area which has been previously identified in the
Redevelopment Plan for Project Area No. 1, originally approved and adopted by the City
Council of the City pursuant to Ordinance No. 80 on July 16, 1975, as may be amended from
time to time, as a blighted area. The area has previously been determined to create a social
and economic burden on the community, which cannot reasonably be expected to be reversed
or alleviated by private enterprise or governmental action, or both, without redevelopment. In
addition, Project Area No. 1 contains vacant and underutilized properties, and properties that
suffer from economic dislocation, deterioration or disuse including depreciated or stagnant
property values and impaired investments. Project Area No. 1 is characterized by the existence
of inadequate public improvements, public facilities and open spaces, which cannot be
remedied by private or governmental action without redevelopment.
Section 6. The City Council hereby finds that the sale of the property pursuant to the
Agreement will assist in the elimination of blight, providing for Developer's construction of
certain improvements, and use described in the Agreement on previously vacant underutilized
land which will remedy the lack of adequate public improvements, assist in the revitalization of
Project Area No. 1, encourage private sector investment, and create job opportunities all for the
health, safety and welfare of the residents and taxpayers of the City.
Section 7. The City Council hereby finds that the proposed sale of the property is
consistent with the Agency's Implementation Plan adopted pursuant to California Health and
Safety Code Section 33490.
Section 8. The City Council hereby finds that the consideration to be paid by Developer
pursuant to the Agreement is not Tess than the fair market value of the property at its highest
and best use in accordance with the Redevelopment Plan for the Agency's Project Area No. 1.
Section 9. In 1989, an Environmental Impact Report was prepared and approved for the
Ahmanson Commercial Development Plan, which was proposed for the same approximately
twelve (12) acre site of which the Property is a part (the "Master Site"). Pursuant to the
requirements of the California Environmental Quality Act (CEQA), Agency staff and the Director
of Community Development have found that (a) the proposed project (sale of the property for
construction of a restaurant facility) is a project within the scope of the EIR prepared for the
Master Site, (b) the proposed project constitutes a less intense use than the proposed
development of the Master Site contemplated by the EIR, and (c) pursuant to California Public
Resources Code Section 21090 and State CEQA Guidelines Section 15180, further
environmental review of the project is not required. The Agency staff found and the City Council
finds in exercise of its independent judgment that none of the factors in State CEQA Guidelines
Section 15162 or 15163 apply, and therefore no subsequent or supplemental EIR or Negative
Declaration is required. Specifically, substantial changes have not occurred with respect to the
circumstances under which the project is undertaken that require major revisions to the previous
EIR due to the involvement of new significant environmental effects or substantial increase in
the severity of previously identified significant effects. In addition, new information of substantial
importance, which was not known and could not have been known with the exercise of
reasonable diligence, is not present in this matter and does not arise due to the proposed
Agreement. Based on all the information in the record of this matter, and on the grounds,
including but not limited to those specified above, the City Council hereby finds the project
exempt from CEQA pursuant to State CEQA Guidelines Section 15180. The City Council
further finds that the project will have a diminimus impact on wildlife resources. The City
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RESOLUTION NO. 06-31
Council directs staff to file a Notice of Exemption and any of the required environmental filings
with the County Clerk's office.
Section 10. The City Council hereby approves the Agreement and the Agency's sale of
the property to Developer in accordance with the terms and conditions of the Agreement
pursuant to the requirements of California Health and Safety Code Section 33433 (b) and
authorizes the Agency's Executive Director and/or any other authorized officers of the Agency to
take such actions, perform such deeds, and execute, acknowledge and deliver such instruments
and documents as the Agency deems necessary in connection therewith. The City Council
hereby authorizes the Agency's Executive Director, and/or any other authorized officers of the
Agency, to enter into the Agreement in substantially the form now on file with the City Clerk with
such changes therein as may be necessary and as the Executive Director may approve in his
discretion as being in the best interest of the City. Such approval to be conclusively evidenced
by the execution and delivery thereof in order to effectuate the development and operation of
the Property by the Developer, and to take such actions, perform such deeds, and execute,
acknowledge, and deliver such instruments and documents as it deems necessary in
connection therewith.
to wit:
PASSED, APPROVED AND ADOPTED this 9t day of March 2006 by the following vote
AYES:
NOES:
ABSTAIN:
ABSENT: NONE
ATTEST:
BENSON, CRITES, BELLY, SPIEGEL, and FERGUSON
NONE
NONE
Ra e e D. Klassen, Cii Clerk
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RESOLUTION NO. 06- 31
EXHIBIT A
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REASCO I REAL ESTATE ANALYSIS SERVICES CO.
POST OFFICE BOX 2809, PALM DESERT, CALIFORNIA 92261
TEL: (760) 340-1429; FAX: (760) 340-2041
EMAIL: LRWREASCO@AOL.COM
February 23, 2006
Ms Lauri Aylaian
Development Manager
PALM DESERT REDEVELOPMENT AGENCY
CITY OF PALM DESERT
73-510 Fred Waring Drive
Palm Desert, California 92260
Copies to: Mr. Justin McCarthy
Mr. David Yrigoyen
REFERENCE: Proposed Sale Of Agency Property To CV Food Service, Inc.,
dba La Soiaa
SUBJECT: Report Pursuant To Section 33433 Of The California
Health And Safety Code
NOTE 1: This report is based on the terms and conditions of the Disposition and
Development Agreement ("Agreement") Dated Nardi 9 , 2006 between the
Palm Desert Redevelopment Agency ("Agency") and CV Food Service, Inc.
dba La Spiga ("Developer").
Dear Ms. Aylaian,
Section 33433 of the California Health and Safety Code stipulates that before any property of
the Agency, acquired directly or indirectly with tax increment funds, is sold or leased (or
otherwise conveyed) for development purposes pursuant to the redevelopment plan, the
conveyance shall first be approved by the legislative body by resolution after public hearing.
The property the Agency proposes to sell to the Developer falls into the category covered by
Section 33433.
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February 23, 2006
LETTER TO: Ms Lauri Avlaian
SUBJECT: Report Pursuant To Section 33433 Of The California
Health And Safety Code
We have prepared a comprehensive report, beginning on page three of this letter, which is
required in order to comply with Section 33433. Pursuant to the report, we have concluded
that the following findings can be included in the resolution approving the Agreement:
FINDING #1: The Sale of the Property will assist in the elimination of blight in
the Project Area.
FINDING #2: The Sale of the Property is consistent with the implementation
plan adopted pursuant to Section 33490 of the California Health and
Safety Code.
FINDING #3: The consideration is not less that the Fair Market Value at its highest
and best use in accordance with the plan.
The rationale for these findings can be found in the report which begins on page 3
of this letter.
Sincerely,
Leonard R. Wolk
Leonard R. Wolk, President
Real Estate Analysis Services Company (REASCO)
MY 33433 REPORTSP'33433 FOR LA SPIGA (1)" 28-Feb-06 11:27 AM
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Following are the detailed Sections of the report:
SECTION 1 - A summary of the major business points of the Agreement between
the Agency and the Developer concerning the proposed sale of the Subject
Property, owned by the Agency, to the Developer.
Reference is made to the Ageement for full particulars of any provision described
herein. In the event of any inconsistency between the provisions herein and the
Agreement, the Agreement shall control.
A. The Subject Property:
1. The Agency owns fee title to certain unimproved real property (the "Property") in the
City of Palm Desert (the "City"). The Property is located on the north side of Painter's
Path, west of El Paseo, within the 12 acre Master Site known as Entrada del Paseo.
2. The Property is legally described in Exhibit A of the Agreement and its size is
approximately 0.53 acres, or 23,077 square feet.
B. Purchase and Sale of the Property:
1. Subject to the terms and conditions of the Agreement, the Agency agrees to sell to
the Developer, and the Developer agrees to purchase from the Agency, fee simple
title to the Property at an agreed to price of $750,000, or $32.50 per square foot.
Agency and Developer agree that the purchase price is the fair market value of the
Property.
* Refer to Article 2 of the Agreement for further details about the Purchase and
Sale of the Property.
C. Development of the Improvements:
1. Developer shall develop, or cause to be developed, the improvements on the
Property in accordance with the Schedule of Performance and the Scope of
Development (Exhibits B and C of the Agreement, respectively). The cost for
developing and constructing the improvements shall be bome solely by Developer.
-� Refer to Article 3 of the Agreement for further details about Development
of the Improvements.
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D. Agency's Obligations:
1. The Agency shall deliver the Property to Developer at close of escrow with a finished
(over -excavated, backfilled, rough graded, compacted and certified) building pad,
and with available temporary power, fire protection and water service.
2. The Agency shall complete the construction of a community use building (the
"Henderson Community Building") on Parcel 12 and the landscaped gardens (the
"Gardens/Open Space") on Parcels 2 and 12, as designated on the Parcel Map
Number 30226, all in accordance with the Master Site Plan, within the time frame
described in Exhibit B of the Agreement.
3. The Agency shall construct, or cause to be constructed and completed prior to a date
which is nine months after close of escrow, the 18 parking spaces and all utilities
described in Exhibit C of the Agreement as "Public Improvements".
Both Parties acknowledge that 205 public parking spaces have already been
constructed, and that 18 more spaces will be constructed by the Agency under the
terms of the Agreement. They further acknowledge that this number of spaces will be
sufficient to serve the improvements currently constructed on the Master Site plus the
planned Henderson Community Building and the Improvements to be constructed by
the Developer.
If the Agency constructs (or permits construction of) additional building(s) on Parcel 1
of the Master Site, Agency agrees to construct additional parking spaces in the full
quantity required for such additional building(s) by local ordinance, without reducing
such number by the number of parking spaces which are subject to shared use
agreements between the Agency and the users of the Master Site.
Refer to Article 3 of the Agreement for further details about Agency's Obligations.
E. Limitations on Transfers and Security interests:
1. Prior to issuance of a Certificate of Completion for the improvements, Developer
shall not sell, assign, transfer, mortgage, hypothecate or convey (collectively a
"Transfer") the Property or any part thereof, or any of Developer's rights or obligations
pursuant to the Agreement, without the Agency's prior written consent, subject to
certain exceptions described in Section 4.1.1 of the Agreement.
MY 33433 REPORTS/"33433 FOR LA SPIGA (1)"
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E. Limitations on Transfers and Security Interests (continued):
2. Developer acknowledges that the identity of Developer is of particular concern to the
Agency, and it is because of Developer's identity that the Agency has entered into the
Agreement with Developer.
* Refer to Article 4 of the Agreement for further details about Limitations on
Transfers and Security Interests
F. Use of the Property:
1. For a period of twenty years after the close of escrow, (the "Term of Use"),
Developer and its lessees, successors and assigns shall use the Property and the
improvements only for the operation of a fine dining restaurant and ancillary uses, and
any other uses expressly permitted by the Agency.
2. So long as the Agreement is in effect and Developer is operating a fine restaurant
on the Property featuring Italian cuisine, Agency shall not permit any other property
within the Master Site to be used for the operation of a restaurant which features
Italian -inspired cuisine.
3. During the Term of Use, Developer shall maintain the Property and the improvements
thereon in good condition and repair and in a manner substantially comparable to the
highest level of maintenance provided by owners of developments in the Coachella
Valley substantially similar to and of similar age as the improvements.
4. The common area maintenance costs as described in Exhibit H of the Agreement
and including landscape water consumption of the Parking Lot Site described in the
Easement Agreement (Exhibit E of the Agreement) shall be included within the
common area expenses shared by all owners and occupants of the Property included
within the Master Site. Developer shall be responsible for the monthly payments to the
Agency of its pro rata share of the common area expenses required to maintain the
Parking Lot Site. Developer's pro rata share of such common area expenses shall be
based on the ratio of the number of parking spaces required for the improvements,
which is acknowledged by the parties to the Agreement to be 60, to the total number
.of parking spaces available within the Master Site.
Refer to Article 5 of the Agreement for further details about Use of the Property.
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PAGE 6 -
G. Events of Default. Remedies and Termination:
1. Subject to the provisions of Articles 2 and 6 of the Agreement regarding Developer's
appeal rights, the occurances which constitute a Default are described in Article 6.1.
of the Agreement.
2. In the event of a Default by any Party to the Agreement prior to the Close of Escrow,
the non -defaulting Party may pursue any and all of the remedies provided in Article 2
of the Agreement.
3. In the event of a Default by any Party to the Agreement after the Close of Escrow, the
non -defaulting Party shall be entitled to the remedies described in Article 6.2.2 of the
Agreement.
-0. Refer to Article 6 of the Agreement for further details about Default, Remedies
and Termination.
SECTION 2 - Cost of the Agreement to the Agency:
The cost of the Agreement to the Agency is comprised of the following three components:
(1). the land acquisition cost; (2). the cost of any improvements to be provided by the Agency;
and (3). the projected interest on the source of funds used to finance the land acquisition cost
and the improvement cost.
A. The Agency's land acquisition cost:
NOTE: The Agency's purchase was funded by a loan from the City.
1. The Agency purchased the Master Site on 11/1/1998 at a purchase price of $3,347,917.
Therefore. the acauisition cost for the Master Site can be expressed as follows:
ACRES SQ. FT.
a. Amount of land 11.97 521,413
b. Cost per acre; per sq. ft. $279,692 $6.42
c. Total cost $3,347,917 $3,347,917
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A. The Agency's land acquisition cost (continued):
2. Calculation of the oro rata land acquisition cost for the Property:
NOTE: The Property area includes the gross restaurant area plus the
amount of land for which Developer has a non-exclusive
easement for 60 parking spaces.
a. Gross restaurant area
b. Plus parking rights area
c. Total area
d. Times cost per acre; per sq. ft.
e. Total cost (pro rata)
ACRES
0.5298
0.4132
0.9430
$279,692
$263,749
SQ. FT.
23,077
18,000
41,077
$6.42
$263,749
PERCENT OF
MASTER SITE
n/a
n/a
7.88%
n/a
7.88%
B. Calculation of the Auencv's protected finance cost for the land purchase:
The land acquisition cost was funded by an interest -only loan from the City, whereby the
interest payments were at the appropriate LAIF rate. The following table describes the
Aaencv's annual interest payments to the City:
YEAR 1998 1999-2005 2006*
1. Loan balance
2. Times average interest rate
3. Interest payments to the City
4. Total payments through
escrow close date = —/► $80,047
$263,749 $263,749 $263,749
5.43% - 3.966%
$2,388.25 $67,198.81 $10,459.64
* LAIF rates for February, 2006 through November, 2006 are not yet available, so
estimates were used.
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C. Cost and timing of the improvements to be provided by the Agency:
NOTE: Projected escrow close date is 11/30/2006
Pursuant to the Agreement, the Agency will provide the following improvements:
ESTIMATED
IMPROVEMENTS COST DUE DATE
1. The finished (over -excavated, backfilled, rough graded,
compacted and certified) pad, and available with temporary
power, fire protection and water service. $9,480 10/31/2006
2. Bringing utilities to the pad. $65,000 5/1/2007
3. Sewer work $40,100 5/1/2007
4. Water lines and detector check for fire sprinkler system $8,053 5/1/2007
5. Fire hydrant $10,000 5/1/2007
6. TUMPF and lizard fees $10,357 5/1/2007
7. Constucting 18 parking spaces. 5760 $8.04 $46,316 5/1/2007
8. Agency's total Improvement cost $189,306
D. Agency's method of payment for the improvements:
1. The building pad will be paid for with tax increment funds.
2. Funds available to Agency when escrow closes
3. Less payoff of City's land loan
4. Funds remaining to pay for Agency's remaining obligation
5. Less cost of Agency's remaining obligation
6. Funds remaining to reimburse tax increment fund
$750,000
($263,749)
$486,251
($179,826)
$306,425
E. Agency's net cost of the Agreement:
1. Interest payment to the City for land loan ($80,047)
2. The Agency will lose one year of investment income that could
have been earned on the tax increment funds to pay for the
building pad, because in the following year, the funds would be
used to fund another project.
At a projected LAIF rate of 3% per year, the Agency will lose ($284)
3. Net funds remaining to reimburse the tax increment fund $306,425
4. Less cost of building pad ($9,480)
5. Net cost of the Agreement to Agency (actually a net gain) $216,614
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SECTION 3 - The estimated value of the interest to be conveyed (the unimproved
Property) determined at the highest and best uses permitted under the
Redevelopment Plan (the "Fair Market Value").
A. Highest and best use for the interest to be convened:
1. Pursuant to its current zoning and a recent appraisal, the highest and best use for the
interest to be conveyed is for development of a retail/restaurant building.
B. Estimated value at the highest and best use of the interest to be conveyed:
1. Pursuant to the recent appraisal, the current estimated value at the highest and best
use of the interest to be conveyed is $32.50 per sauare foot.
Section 4 - The estimated value of the interest to be conveyed (the unimproved
Property) determined at the use and with the conditions, covenents and development
costs required by the sale (the "Reuse Value"):
1. Pursuant to the appraisal, the purchase price ($32.50 per square foot) represents
the Reuse Value of the Property at the use, and with the conditions, covenants and
development costs authorized by the Agreement.
Section 5 - Findings to be included in the resolution approving the transaction:
FINDING #1: The sale of the Property will assist in the elimination of blight in
the Project Area.
FINDING #2: The sale of the Property is consistent with the implementation
plan adopted pursuant to Section 33490 of the California Health
and Safety Code.
FINDING #3: The consideration is not less that the Fair Market Value at its
highest and best use in accordance with the plan.
MY 33433 REPORTS/"33433 FOR LA SPIGA (1)" 28-Feb-06 11:27 AM